Business Matters Extra - How to thrive whatever the economy

Stuart Cross says that in good times and bad, it's the way in which your organisation manages and leads that determines its survival or failure.

You probably won’t be surprised to learn that Poundland, the discount retailer, has recently announced a 35% increase in profits. In difficult economic times, it’s logical that more shoppers look for value and seek out bargains. However, it may also surprise you to learn that Harrods, the luxury department store, delivered an even bigger profit increase of 39%!

It’s not only Harrods that is thriving. Apple and BMW, for example, are two added-value brands that have accelerated growth in recent years, and Singapore Airlines, the high-service airline, has continued to deliver profits at a time when its full-fare rivals get ever-deeper into the red.

How is it, in such a challenging economy, that these non-discount brands can do so well? The answer is that the driver of business success remains the same in good times and bad: it is based on your organisation having a clear competitive advantage – and if you want to be advantaged, you must become a leader.

There are five types of leadership for you to choose from:

• Product Leader. Companies such as Apple and BMW are focused on having the very latest and very best products for their target customers. New product development is critical to their success, and customers are willing to pay more to get the best.
• Cost Leader. Poundland, Ryanair and similar businesses succeed by offering the lowest possible prices in their markets, and keep their costs even lower.
• Convenience Leader. Companies, including McDonalds, Dell and Amazon, give their target customers a highly dependable, convenient and hassle-free experience every time.
• Service Leader. Organisations, such as Singapore Airlines and John Lewis, keep their customers loyal by providing friendly, expert advice and market-leading levels of customer support.
• Solutions Leader. IBM and McKinsey, for example, develop close and deep relationships with their customers, enabling them to create tailored, bespoke solutions.

The key is that you can realistically only lead on one of these dimensions. Amazon, for example, doesn’t have people on the end of a phone to give you more information and advice on its products. It knows it’s a convenience leader, not a service leader, and its operations are focused on reliability, speed and value.

The companies that are struggling in the current economy are those that haven’t created a clear and compelling leadership position. Instead, they remain stuck in the middle, trying to compete on all five leadership types. In a buoyant economy, they may still be able to survive, but in a downturn where even the strongest businesses may catch a cold, these companies will die of pneumonia.

The simple truth is that if you’re not leading, you won’t succeed. You can choose how you lead, but you have no choice whether or not to lead.

Which of the five leadership positions would best meet the needs of your business and target customers, and what steps can you take now to strengthen your leadership position?

Stuart Cross is the President of Morgan Cross Consulting and helps companies including Alliance Boots, Avon, Morrisons and RBS Insurance to dramatically accelerate growth. His new book, The CEO’s Strategy Handbook, is out now.

Find out more at www.morgancross.co.uk or www.amazon.co.uk.

© Stuart Cross 2011. All rights reserved.